Overview: Iran Analysis Weekly Report March 06, 2016
Mar., 2016
Vistar Business Monitor
Iran’s 26 February parliamentary and Assembly of Experts elections saw strong gains for pragmatic forces, heralding a new openness in Iran and a much better window of opportunity for foreign businesses.
The reformist-moderate bloc made major gains in Iran’s parliamentary elections, including winning all 30 seats in Tehran. The precise political makeup of Parliament remains unclear as 69 seats will be decided in runoff elections sometime in April. The hardliner bloc lost its near-absolute dominance of Parliament as many heavyweight Principlists and prominent critics of President Hassan Rouhani were voted out of office, including head of the parliamentary Principlist faction Gholam Ali Haddad Adel. Parliament has 290 seats, and no single faction appears to have won a majority.
While no one won a solid majority in Parliament, and the conservatives led with around 36 percent of seats, the pragmatists/reformists centered around Iranian President Hassan Rouhani made a strong showing with 32 percent, shoring up their power.
Two of Iran’s leading hardliners, Ayatollah Mohammad Taghi Mesbah Yazdi and current Assembly of Experts Chairman Ayatollah Mohammad Yazdi, did not garner a sufficient numbers of votes to remain in the Assembly of Experts. Guardian Council Chairman and fellow hardliner Ayatollah Ahmad Jannati barely made the cut in the Tehran Assembly race, in which Ayatollah Ali Akbar Hashemi Rafsanjani won the most votes.
In the whole scheme of things, the parliamentary results are very important because the conservatives will have to join forces to a greater extent with the pragmatists and reformists on some issues. And radical forces that have fought the opening up of Iran to the international community have been sorely diminished.
On the economic note, the government cabinet in a meeting on Wednesday agreed to increase the Central Bank of Iran’s capital by 5 trillion rials ($165.5 million) from the bank’s contingency reserves. CBI capital will reach 48.4 trillion rials ($1.6 billion) from the previous 43.4 trillion rials ($1.4 billion). The bank also raised its capital by 6.4 trillion rials ($211.9 million) last year.
Although no GDP reports were released so far this year, the vice-governor of the Central Bank of Iran announced that the CBI will release its nine-month economic growth report in the last week of the current fiscal year (ends March 19). The CBI did not mention the annual GDP growth rate in its two last quarterly reports, drawing criticism for apparently avoiding depressing data.
According to the CBI data, banks gave a total of 2.98 quadrillion Rials ($98.2 billion) in loans during the ten months ending January 20, marking an increase of 10.4% or 282.1 trillion Rials ($9.3 billion) compared to the same period last year. The data also indicates that the services sector still tops the list of borrowers as it received 1.12 quadrillion Rials ($27.3 billion), accounting for 37.8% of the total loans. Industries and mining, and the housing sector accounted for 28.7% and 10.7% of the loans, respectively.
The Head of the CBI credit department announced that The Central Bank of Iran is considering the possibility of lowering mortgage interest rates. Regarding the recent cut in lending rates the CBI is also considering subsequent cuts in a broad range of loans related to the housing sector. He also mentioned that the proposal is yet to be sent to Money and Credit Council-- the country’s highest monetary policymaking body.
Table of Contents
Overview
News Highlights
Economic Affairs
Macro-economy
Will the Crisis of Unauthorized Financial Institutions Permeate to Banks?
Impact of Lower Interest Rates on Capital Market
Opportunities and Challenges for Foreign Investors in the Iranian Capital Market
Unifying the Foreign Currency Rates
Iran Needs to Address its Economic Problems for Future Growth
Challenges Facing Innovators in Iran
New Iranian Petroleum Contract (IPC) Opportunities
Macro-economic Data
Oil and Gas
Weekly Review
The Effect of Iranian Elections on Oil Majors
Trade
Domestic Affairs
Parliament and Assembly of Experts Elections
The Outcomes of Elections and What They Means for Rouhani
A Strong Message to the Hardline Conservatives
Iran Attempts to Strengthen Its Fragile Airforce
Key Political and Economic Calendar
International Affairs
U.S. Presidential Candidates’ Views on Iran’s Nuclear Agreement
Republicans
Democrats
Laws, Regulations and Policy Updates
Sanctions
Financial Markets
Tehran Stock Exchange
Foreign Shareholders in Iranian Capital Market
Foreign Exchange Market
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